I had no idea how this works at first, and wasted a lot of stamina on normal mode. Switched to hard, and I have to say - I understand, they don't want people to accidentally reset their progress. But the amount of things you have to click through to change it...

Some hints for hard mode - negate damage is your best friend. Some pests attack before you do, and sometimes attack twice. It also prevents blue bar from decreasing. Speaking of which, life leech is your second best friend, as it lets you restore said blue bar. Put you life stealing knights in first slots on the team, so they actually get to use their skills, deal damage and heal before pests die.